Is staff fluctuation preventing you from achieving your business goals?

Recruiting and training an employee is so expensive that his sudden departure can be a blow. And yet you have to be prepared for them, because staff turnover is a natural process. It's best if you can predict it and be one step ahead of your team. 

Two definitions are most important in the context of this topic: 

• staff fluctuation - this is the movement of employees within and outside the company: their replacement, hiring and firing. 
• employee retention - is the company's ability to retain employees.  

Retention is measured by dividing the number of employees at the beginning of the period under review by the number of employees who are still working and then multiplying the result by one hundred. So if out of 100 employed people "stayed" 70, we are talking about retention at the level of 70 percent. We do not consider new employees. Retention can be measured at any time - after the trial period, quarter to quarter, year to year etc. 

Staff turnover - definition

Staff turnover, understood as the process of replacing employees at a given job position in an enterprise, is a component of the process of moving the already employed and newly employed workforce. Staff turnover can be:

• forced or voluntary,
• desired or undesirable,
• influencing the organization positively (supporting its development) or negatively (reducing the value of human capital).

Voluntary turnover of staff is one of the key indicators for the smooth functioning of the company. It may adversely affect the development of the enterprise. It can also manifest itself in:

• high costs of acquiring and implementing new employees,
• decrease in the work efficiency of individual teams,
• lower ability to create innovation.

Staff turnover is also associated with numerous costs of lost value related to:

• loss of knowledge of departing employees,
• downtime in performing certain tasks,
• overload and negative moods among other employees,
• a decline in efficiency, and thus the company's competitiveness.

Staff turnover therefore entails significant costs, both direct and indirect. A clear turnover of staff is currently one of the basic features describing the Polish labor market. The growing rotation is mainly influenced by decreasing unemployment, which gives employees more power in the labor market. The greater number of jobs means that the employee sees more opportunities to find a job. Not only better paid, but also more suited to his expectations.

Staff turnover - quotes

about the value of employees as the company's basic resource, he is convinced, among others, by Richard Branson, who often emphasizes that “The customers are not the most important. Employees come first. If you take care of your employees, they will take care of the customers. " All activities undertaken by the organization, aimed at current and potential employees, aimed at building its image as an attractive employer, as well as supporting its strategic business goals, are now a "must have" of every organization.

Competition on the labor market for the best employees is increasing. That is why more and more organizations pay more attention to the image of the company as an employer. Companies consciously invest in activities building this image. In addition to the declared increase in wages, they pay more and more attention to the non-financial aspects of employment. These are employment stability, participation in interesting projects, career development opportunities or a friendly work environment. As Richard Branson notes: “Train people well enough to let them go. Treat them well enough that they won't want to do it.

Staff turnover does not come out of nowhere. This is evidenced by another famous Richard Branson quote - "Being a good listener is key to being a good leader." Before you make specific decisions to implement specific incentive models, analyze the current situation of your company. Listening is key to retaining the best employees. To be able to make the necessary changes in creating your company as a remarkable employer, answer the following questions honestly:

• Do the current image and recruitment materials show the truth about your company?
• What about salaries and other non-wage benefits for your organization in relation to the competition?
• What are your employees complaining about the most?

According to research on the reasons for changing jobs among employees, the main reason for resignation from the current job is the higher salary of the new employer. The next places are: the employee's willingness to develop professionally, changing jobs due to a more favorable form of employment and dissatisfaction with the previous employer, or interpersonal conflicts. As early as the beginning of the 20th century, Henry Ford noted that "the ambition of the employer as a leader should be to pay better wages than in any other similar enterprise, and the ambition of the worker should be to make it possible."

As Bill Gates emphasized - "If it is not believed that all employees can contribute to the company's success, all the technology in the world will not help to increase their competences." For years, organizations have been looking for a sustainable way to achieve success. The answer may be to place greater emphasis on the intangible resources of the organization, which are its employees. It's high time to take responsibility for your employees and potential candidates. Specific people are always responsible for the employer's brand, both inside and outside the company.

Main causes of staff fluctuation 

Staff turnover is a natural phenomenon - as long as it does not interfere with the day-to-day functioning of your company. You have to reckon with the fact that some people will leave their jobs. Others will dream of new perspectives. In fluctuation, there is also talk of moving employees from department to department, one office to another, etc. If you don't allow employees to change jobs or get promoted within the structure of the company, they will probably start looking for opportunities outside the company. 

Employees may leave the enterprise for a variety of reasons. Both due to low wages, lack of promotion opportunities, poor working conditions, lack or low social benefits, etc., and many other, less rational reasons. From the observations of the contemporary market it is clear that traditional methods of motivating employees are not enough. It is not enough to meet the expectations of employees and significantly increase their job satisfaction. Additionally, the high degree of social diversity makes it impossible to use uniform tools for influencing employees.

The current work model, which was even strengthened during the pandemic, favors the staff turnover. Hardly anyone today works in one place for 30 years. Working in many places at the same time, a nomadic way of employment and loose ties with the employer have become the norm. In short - staff turnover is part of the current labor market and this is unlikely to change in the coming years. 

Employees are the most loyal to companies that have a clear and attractive vision or mission. If your company has not developed such standards, employees may be confused and move away to the competition that sends out more readable messages.  

Staff turnover is usually not viewed positively. The exceptions are some recruitment models, such as the sieve model. In it, as part of fierce competition, employees are to "crumble". At the end, those with the highest competences and the most resilient are left. However, even here, you need to monitor the level of staff turnover and adjust the level of workloads. Otherwise, you may be left without any employees ... 

Interestingly, most employees change their employer for non-financial reasons, including disappointment with the scope of duties, lack of feedback on own work, lack of development prospects, unfair and ineffective organizational management system, excessive stress at work, imbalance between work and private life. It is therefore not easy to prevent employee turnover. Will high remuneration be a sufficient motivator for employees if they perceive the organizational culture as damaging their professional or personal development?

How has your staff fluctuation progress over the years?

At the turn of the 19th and 20th centuries, when the society was highly industrialized, employees avoided changing jobs, so companies did not take into account the needs of employees, which, in turn, employees did not manifest for fear of redundancies. With the development of the economy, the creation of new workplaces and the better adaptation of employees to changes, the market focused on employers was transformed into a market focused on employees, which resulted in changes in the approach of the organization to employees. Currently, companies are forced to fight for employees and compete with each other for their attention and meeting expectations. He came to help employer branding – brand building strategy as an employer.

How to measure staff turnover? 

Staff turnover is measured in two steps. The first is to recognize the scale of the phenomenon. An indicator derived from the retention level described above may be used here. Its inverse allows you to determine how many people have left the company. Unfortunately, it is impossible to say what the right turnover level is. It looks different depending on the specifics of the industry, location, contract length and many other factors. However, if you regularly measure the level of fluctuation in your business, you may notice it starts to rise rapidly and you can then take corrective action. 

The second step in measuring turnover is to investigate the causes of the phenomenon. Check how the staff fluctuation differs between departments. Perhaps this will allow to draw the first conclusions? In addition, consider which causes of fluctuation could have been avoided and which could not have been avoided. Retirement or after a trial period should be taken into account when you plan to run your business. This category includes factors that you do not have much influence on, such as starting a family by an employee or his move out. 

How can I prevent staff turnover? 

Staff turnover must be taken into account even before the recruitment process is completed. Then you can hire employees who best fit the vision and nature of the company. Then they will be a better fit for the team and there is less chance that they will leave quickly. This is also why it is so important to test not only skills, but also soft skills, which will ensure a harmonious coexistence of a given person with the management and colleagues from the department. Of course, the appreciation of the crew members is also important. It is important for them to feel that they have a real impact on the operation of the company. 

Research shows that millennials and younger age groups are mostly determined to leave the workplace if they feel that another company is more diverse and pro-social. Openness to cultures, various degrees of disability, employment models and stages in the life of subordinates is slowly becoming the norm that employees expect. 

Unnecessary staff turnover - how to prevent it?

Preventing unnecessary employee rotation is closely related to both the implemented incentive systems within the organization and the general situation on the labor market and the structure of society. An employee satisfied with their duties and remuneration for their performance, performs their work more efficiently and develops their skills more willingly, thus becoming an even more valuable team member.

An effective way to prevent unnecessary fluctuation of staff and to get the most benefit from the rotation that we are unable to avoid is a properly implemented employer branding – all the internal and external activities of the company related to the management of the social potential of the organization, shaping its size and structure, and improving it by creating favorable conditions for employees to engage in the company's activities and increasing its market effectiveness, as well as attracting the right employees from the labor market.

By running employer branding, companies create their own personality profile based on the uniqueness of employees, their values, habits, norms, habits, as well as abilities and skills. The resources contributed by employees, appropriately shaped and developed by the organization, can be the basis for building an original and unique organizational culture, thanks to which it will be possible to combine all employees into a well-coordinated team, implementing the organization's goals together.

Negative effects of personnel changes 

Recruiting an employee costs an average of PLN 3-4 thousand. zloty. On average, 42 days are required to fill a position. In addition, there are the costs of training that the person has attended in the new workplace. No wonder you prefer to avoid turnover and the associated expenses. It is said that it is much cheaper to keep an existing client than to look for a new one and convince them to your services. The same principle applies to employees in the HR world. 

The disadvantages of staff fluctuation can be felt on many levels. Lets start with employer branding. Company image suffers when the same job advertisements appear again and again, and candidates begin to suspect that problems await them in this position. The confusion also has a demotivating effect on those who stayed in the company. Even the best internal communication it will not make them feel confident when they have to greet new colleagues every few weeks in the place of the departed.  

A large turnover of staff also means bad PR. It has happened before that a company had to issue PR messages to deal with the negative image effects of high employee turnover. Sometimes it is enough to change a bit communication strategy problem. Other times, the entire company structure is reorganized to make sure that employees are happier. Regardless of which situation applies to your company, we will be happy to help you deal with the problem.